Accountants and business groups have urged the U.K. government to redirect £1.6 billion of unused coronavirus grants to help people and businesses excluded from coronavirus support schemes.
The Association of Chartered Certified Accountants (ACCA) and #ForgottenLtd, a campaign for “fair and equal” government support for small limited companies, believe a cash injection is “exactly what many companies need to enable them to survive and to continue to employ staff, generate taxes, and to contribute to their local economy and community,” ACCA UK said in an August 5 release.
“This repurposing idea makes sound economic and business sense, and we congratulate the Institute of Directors and the Federation of Small Businesses for approaching the U.K. government,” said Claire Bennison, head of ACCA UK.
The business groups criticized plans for the closure of grants paid through the business rates system, The Times reported on August 4. The government had asked local councils to return unspent funds estimated at £1.58 billion as of mid-July, but Tej Parikh, chief economist at the Institute of Directors, said it would be “deeply frustrating to see [the funding] evaporate.” The newspaper quoted the Federation of Small Businesses as saying unallocated funds should be “repurposed to help businesses in need that have been excluded.”
“ACCA members working with micro and small business clients have been telling us over recent months just how stressful the situation has been, compounded by the immediate liquidity crisis many are now facing. This proposal offers a clear message of support and a potentially timely lifeline for those most in need,” Bennison said.
“This cash represents crucial help that could save millions of jobs and prevent the closure of many small and micro businesses across the U.K., by helping those who have so far received little to no government assistance,” said Gina Broadhurst, cofounder of #ForgottenLtd. “The mental health implications of being left unsupported for so long have really taken their toll, and business owners across the country have been left to sink or swim — and in some cases, they’re in desperate straits, with real hardship the new norm.”
A petition calling on the government to provide a COVID-19 support package for director-shareholders of small limited companies, in line with support offered to people who are employed or self-employed, had attracted more than 91,000 signatures.
Chancellor of the Exchequer Rishi Sunak has “effectively drawn a line under helping the million-plus people who have been excluded” from the government’s coronavirus support schemes, Mel Stride, Treasury Committee chair, said in July. Sunak has defended the work-related schemes and other support for business, and pointed out that the government has provided “extra funding for the welfare safety net, to get us through the outbreak and help those unable to access other forms of support.”
Job Retention Bonus
HMRC published on July 31 guidance on the job retention bonus, part of a plan for jobs announced by Sunak on July 8. The bonus is intended to reward employers that successfully bring back staff furloughed under the coronavirus job retention scheme, which is set to end on October 31.
The bonus is a one-off payment of £1,000 for every employee that the employer claimed under the job retention scheme and “who remains continuously employed through to January 31, 2021,” HMRC said, adding that to be eligible, “employees must earn at least £520 a month on average” between November 1, 2020, and January 31, 2021.
Bonus payments will be made to employers from February 2021. Employers should ensure that they have complied with Pay As You Earn obligations, HMRC said, adding that failure to maintain accurate records may jeopardize a claim. Payment of the bonus will be withheld if HMRC believes there is a risk that coronavirus job retention scheme claims “may have been fraudulently claimed or inflated.”
A survey of businesses indicated that 43 percent of firms intend to access the job retention bonus. “A further 40 percent will not use the scheme,” the British Chambers of Commerce said in an August 5 release. The organization called on the government to “reduce the overall cost burden on firms to protect business and preserve as many jobs as possible in the coming months.” It recommended an “18-month expansion” of the employment allowance against employers' National Insurance contributions from £4,000 to £20,000, and an increase in the contributions threshold for employers.
“With confidence and demand not returning at the scale firms need, the government must take radical steps to slash the tax burden around employment to help companies pay valued staff,” Claire Walker, co-executive director of the British Chambers of Commerce, said.